User Development Fee at KIA hiked for four months

Passengers travelling on international and domestic flights from Bengaluru’s Kempegowda International Airport (KIA) will have to pay more for tickets from today. The Airports Economic Regulatory Authority of India (AERA), on Monday, increased the User Development Fee (UDF) charged at KIA after amending its previous order. The fee for domestic passengers will increase from ₹139 to ₹306 (little over 120%). International passengers will be charged ₹1,226, from the earlier rate of ₹558 (a 119.71% rise).

The revised charges will be applicable for tickets bought from April 16 to August 15, 2019, after which the airport will revert to the former UDF rates. “This incremental increase in charges will provide BIAL (Bangalore International Airport Limited) much-needed relief as we are in the midst of a massive ₹13,000 crore-capacity expansion to cater to the stupendous growth of the aviation sector in India,” said Hari Marar, MD & CEO, BIAL, in a press release.

However, transport expert Sanjeev Dyamannavar said, “The increased UDF rate is a burden on air passengers. If a family of four is travelling domestic, they will be spending more than ₹1,200 as UDF. The BIAL is asking for increased UDF even before completing its proposed expansion plans.”

The AERA amended its previous order after being directed by the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) to do so. Last August, the regulatory authority had slashed UDF rates. While revising the aeronautical tariff, it had stated that for tickets issued on or after September 16, 2018, a UDF of ₹400 would be charged for international passengers and ₹100 for domestic passengers. For tickets issued after April 1, 2019, a UDF of ₹558 would be applicable for international passengers and ₹139 for domestic passengers.

For tickets issued after April 1, 2020, international passengers will be charged ₹716 and domestic passengers ₹179. BIAL had opposed the slashing of UDF citing that it could impact its expansion plans. The State government, too, had asked the AERA to retain the prevailing rates.

At the time, BIAL, the operator of the KIA — aggrieved by this development — approached the TDSAT and challenged the AERA order with an appeal to stay the impugned order and permit it to collect the charges as per the rate card for the first control period. In its appeal, BIAL informed the TDSAT that the UDF rate difference between the first control period and second control period could result in a revenue difference of ₹50 crore per month.

AERA, in its amendment to the order, has now directed the BIAL to maintain a separate bank account to maintain the excess UDF collected. The funds from the bank account shall be used only for the purpose of capital expenditure for the expansion project. The authority will review the additional collection and actual expenditure incurred for BIAL’s expansion project. This will be taken into consideration at the time of determination of tariff for the next control period, subject to outcome of final order of the TDSAT, said the AERA in its amended order.


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